Investors were left unimpressed after Vodafone reported full year to 31 March 2021 results. While the mobile network giant presented a catalogue of information in a positive light, including plans to become a next generation connectivity and digital services provider in Europe and Africa, shareholders appear unhappy with the prospect of uninspiring growth targets.
‘Our digital transformation initiatives have generated savings of €0.5 billion over the year and the integration of the assets acquired from Liberty Global is well ahead of plan,’ said chief executive Nick Reed.
UNINSPIRING GROWTH
Cutting to the chase, investors face continued mid-single digit earnings and free cash flow growth, with a commitment to pay dividends in the next few years that will not necessarily improve on the €0.09 paid out in the last two years.
‘Broadly speaking, Vodafone’s 51 page release says that it has now finished reshaping the business and will now focus on becoming a next generation connectivity and digital services provider in Europe and Africa, though it is not entirely clear what actually changes, with all the usual buzzwords in abundance,’ said Megabuyte analyst Philip Carse.
Investors showed their displeasure, sending shares in Vodafone plunging lower, the stock heading the FTSE 100 loser board with near-6% fall to 133.43p.
Three years ago the stock was trading at 235p.
MORE DECLINES
On the numbers front, Vodafone posted earnings before interest, tax, depreciation and amortisation down 1.2% organically at €14,386 million and free cash flow 12% lower at €5,019 million, both at the bottom end of guidance.
While this reflected the obvious impacts of the Covid-19 pandemic, particularly on roaming charges as travel was ruled out for virtually everyone, everywhere.
Total revenues fell 2.6% to €43,809 million although service income declined just 0.1% to €37,141 million - it actually grew 0.8% in the fourth quarter, driven by Germany and its Vodacom Africa arm. In the UK, earnings before interest, tax, depreciation and amortisation and service revenues fell 7.3% and 0.8% respectively.
‘Despite the company’s relative resilience to the pandemic and return to revenue growth towards the end of the year, investors are clearly not too enamoured,’ said Megabuyte’s Carse.
